Golden Bay Cement,
Eastport Service Centre
Auckland, New Zealand
Environment.
The environment is a key consideration in everything we do. An executive Climate Change and Environmental Sustainability Council directs company-wide programmes to support the achievement of our environmental goals.
In the last 12 months, much of the Council's efforts have been directed at emissions trading and carbon reporting, with the introduction of an emissions trading scheme in New Zealand on 1 July 2010 and the energy and carbon reporting requirements in Australia. There has been a focus on identifying energy efficiency opportunities, to enable us to achieve our commitment of reducing our CO2 emissions by five percent between 2008 and 2012.
Our energy and CO2 inventory is updated every six months and provisional figures for this financial year show total CO2 emissions of 1,201,847 tonnes. This includes the CO2 emitted during the generation of electricity used by Fletcher Building and three months of Crane operations. Our New Zealand operations emissions totalled 664,687 tonnes, while Australian operations emitted 377,554 tonnes. Of those business units with a high CO2 output, the largest single emitter was Golden Bay Cement with 486,454 tonnes. Our major manufacturing plants for laminates and panels in New Zealand and Australia emitted a total of 176,935 tonnes and the Pacific Steel and Wire plants emitted 62,359 tonnes.
By 31 December 2010, the first three years of our five-year target period for CO2 emissions reduction policy were completed. Our absolute emissions had decreased from 1,526,854 tonnes CO2 in 2007 to 1,203,876, a decline of 21 percent. Production levels in 2010 were less than 2007, however, and therefore further analysis was carried out using an emissions efficiency index we have developed in the last 12 months. This provides a better indicator of emissions efficiency performance.
We do not calculate emissions intensity for all of Fletcher Building's products and services. However, the cement we produce results in 45 percent of the Group's emissions and six products (including cement) result in approximately 80 percent of our emissions. Reviewing emissions-intensity for these products provides an indicator of improvements in efficiency. The improvements in cement and fibreglass insulation emissions efficiency since 2007 have resulted in a four percent improvement in our overall emissions efficiency between 2007 and 2010. The manufacture of cement in 2007 resulted in the emission of 0.792 tonnes of CO2 per tonne in 2007 and 0.711 tonnes in 2010. In 2010, CO2 emissions intensity improved through the increase in biomass fuel substitution from 11 percent in 2007 to 28 percent of thermal energy.
Fletcher Building continues to participate in the Carbon Disclosure Project, which requires reporting how we manage the risks and opportunities of climate change and providing a complete inventory of our 2010 energy use and CO2 emissions.
New Zealand's emissions trading scheme (ETS) has now been operating for 12 months, with coverage extended to industrial and transport emissions on 1 July 2010. It has been designed so that energy suppliers rather than energy users have to buy emissions units ("carbon credits") and surrender these to the Government. Our operations that emit CO2 from fossil fuel combustion do not directly participate in the ETS but are subject to the higher energy costs passed down by energy suppliers.However, our cement and steel manufacturing operations emit process CO2 and our cement plant uses imported coal, so these operations are direct participants in the ETS. Cement and steel manufacturing also meet the threshold tests for offsetting the costs of the ETS on emissions-intensive, trade-exposed industries. Both receive free allocations of emission units to partly offset their increased costs. These allocations mean that the increased energy costs for our New Zealand operations from the ETS are not material.
In July, the Australian government announced it will introduce its Clean Energy Future Plan, which includes a carbon price mechanism from 1 July 2012. Fletcher Building will incur additional costs indirectly from an increase in natural gas and electricity costs passed on by retailers and from the carbon price that will be imposed on transport diesel from 1 July 2014. As in New Zealand, we understand Australia will grant free emission units to emissions-intensive, trade-exposed industries. This would likely include a portion of the emissions from our composite wood panels operations. Our operations that are not exposed to significant international competition, such as our sand quarry and downstream concrete and steel products, are likely to see their costs increase but may be able to recover these through price increases. The active engagement of our businesses in seeking energy efficiencies and emissions improvements will ensure that these costs are minimised.
We have developed an internal waste-reporting tool that enables business units to classify and quantify waste streams, and identify cost-effective opportunities for waste reduction. Over time, this tool will enable Fletcher Building to quantify and report its total waste generation at a group level.
The company also participates in organisations that are leading sustainability practices and policies, including the Green Building Councils in Australia and New Zealand. In New Zealand, this includes "Homestar", a residential rating tool to help homeowners lift the performance of their homes. We have also contributed to a number of important Green Star-rated buildings across Australia and New Zealand, either as construction contractors or through the supply of accredited materials.